Rajesh Khanna vs Rakesh Kumar Gupta

PER: MANNI SANKARIAH SHANMUGA SUNDARAM, MEMBER (JUDICIAL)

The Applicant has preferred the present Application under Section 60(5) of the Insolvency & Bankruptcy Code, 2016 (“Code”) seeking the following reliefs:

The Applicant herein had booked two units bearing no. ETTS -1486 & ETTS-1505 at the Project, namely Earth Titanium Studios sought to be developed by Earth Iconic Infrastructures Pvt. Ltd. (hereinafter referred to as 'the Company'). The Applicant had made payments to the tune of Rs. 15,26,522/-and Rs. 9,64,862/-towards Unit bearing nos. ETTS-1486 & ETTS-1505 respectively. In terms of the Agreement between the parties, the Company was liable to provide assured returns to the Applicant herein, which the said Company had failed to give after a certain point of time, therefore, in addition to the amount already paid by the Applicant, the total amount due and payable by the Company (including the outstanding Assured Return amount) was Rs. 20,31,660/- and Rs. 11,81,734/- for Unit Nos. ETTS-1486 and ETTS-1505 respectively. In addition, the Applicant herein had also made substantial payments to the tune of Rs. 29,05,829/- (Rupees Twenty Nine Lakhs Five Thousand Eight Hundred and Twenty Nine Only) in cash, which was adjusted by the Company via Discount Notes, therefore, in total an amount of Rs. 61,19,223/- (Rupees Sixty One Lakhs Nineteen Thousand Two Hundred and Twenty Three Only) in principal was claimed by the Applicant.

The Applicant herein had received a communication dated 18.02.2017 from the Company stating that the Project in which the Applicants had made considerable investment was being stalled and as a goodwill gesture, the Company had transferred the amount(s) paid including the outstanding Assured Return to another Project, namely Elacasa, situated at Sector 107, Gurgaon, being developed by the Corporate Debtor. In terms of the said transfer letter, the Applicant was provided another Unit bearing no. F-1101 admeasuring 1890 sq. ft. for a total sale consideration of Rs. 47,68,470/-(Rupees Forty Seven Lakhs Sixty Eight Thousand Four Hundred and Seventy Only).

The Corporate Debtor on 12.10.2017 had even issued a Customer Sale Ledger showing that an amount of Rs. 32,13,394/-(Rupees Thirty Two Lakhs Thirteen Thousand Three Hundred and Ninety Four Only) has already been paid by the Applicant and was with the Corporate Debtor.

The Applicant herein had submitted its claim form vide its communication dated 25.05.2019 and follow up email dated 02.06.2019, which was admitted by the Resolution Professional and the Applicant herein even voted in the Committee of Creditors ('CoC') meeting. The claim of the Applicant was admitted by the RP after clarifications and was put in Category B of the list of creditors as on 17.06.2019, subsequently, the Applicant was even part of the COC and had also voted in the 1" COC Meeting. It is submitted that the said claim filed by the Applicant, included the cash component deposited by the Applicant, which was shown as discount but the RP did not accept the cash component while collating the claims but assured the Applicant that proportionate discount would be given at the time of final conciliation of the balance amount due and payable by the Applicant. It is reiterated that the claim furnished by the Applicant was admitted and he was even given a vote in the in the 1^st COC held by the RP.

The RP sent an email dated 03.06.2019 confirming the receipt of the claim submitted by the Applicant.

The RP sent an email dated 04.06.2019 pointing out alleged discrepancies in the claim form submitted by the Applicant herein, namely:

The Applicant on the very same day issued an email dated 04.06.2019 explaining that he had made an investment in the Company earlier, which was transferred to the Corporate Debtor by the Director of the Corporate Debtor. It was submitted that when the Builder Buyer Agreement was to be signed between the parties, the office of the Corporate Debtor was sealed by the Economic Offences Wing ('EOW'), therefore, the same could not be executed. The Applicant had furnished a Customer Sales Ledger which was issued by the Corporate Debtor to substantiate its claim, therefore, the RP ought to have collated the same in terms of the documents furnished by the Applicant herein.

The RP vide its email dated 17.07.2019 without any application of mind and without taking into consideration, the reasons and explanation made by the Applicant herein demanded additional documents to substantiate the claim of the Applicant. It was submitted that the RP did not give any reason for not considering the sales ledger of the Corporate Debtor while asking for additional documents. The Applicant vide its email dated 17.07.2019 again pointed out the Customer Sales Ledger already submitted by the Applicant pursuant to which the Claim was earlier admitted by the RP.

It has also been submitted that the Applicant vide its email dated 24.07.2019 had followed up with the Resolution Professional regarding the status of his claim and had again informed of the transfer and the reason that the Builder Buyer Agreement was not entered into between the parties. The Resolution Professional did not revert to the said communication of the Applicant.

The Applicant followed up with the RP on various occasions but the RP did not give any clarity on the same, on the contrary the RP put the claim of the Applicant in category C, which meant that the status of the claim went from admitted to neither admitted nor rejected. The Applicant vide its email dated 07.03.2020 wrote to the Resolution Professional while providing him with Transfer Letter dated 18.02.2017, in terms of which the booking and money(s) paid by the Applicants in the earlier Group Company were now transferred to the Project sought to be developed by the Corporate Debtor namely, Elacasa.

The Applicant sent an email dated 09.03.2020 to the RP again demanding clarification on the claim filed by it, which had been illegally, incorrectly and unjustly put in Category C, wherein it was neither admitted nor rejected and would be left out of the Resolution Plan furnished by any prospective Resolution Applicant.

The RP vide its email dated 09.03.2020 wrote to the Applicant stating that the claim process had been stopped since 30.01.2020 without taking into account that the Applicant had submitted its claim almost 8 (eight) months back.

The Applicant sent an email dated 09.03.2020 to the RP, informing him again that the Applicant had already submitted his claim 8 months prior and had continuously been following up with the RP but in vain. It has been submitted that the Applicant herein had submitted his proof of transfer of ownership and the RP had failed to either reject or admit it, thereby, leaving the Applicant herein devoid of any legal remedy to challenge the same in an appropriate court of law.

The RP sent an email dated 11.03.2020 to the Applicant stating deficiencies in the claim form submitted by the Applicant. The Applicant has submitted that the grounds for not admitting the claim of the Applicant were as follows:

a. No entry has been recorded in the financial statement of the Earth Buildprop Pvt. Ltd. for such transfer;

b. As per our record signature of Mr. Atul Gupta, Director of the company do not match on the letter submitted to us; and

c. Basic rate could not be as low Rs. 2,150 psft in the February, 2017 while transferring in your favour as allotment in 2013 for the project Elacassa was at a rate higher than 3000/- psft.

The Applicant has submitted that from a bare perusal of the above, it becomes abundantly clear that the RP had exceeded his jurisdiction in adjudicating the claim of the Applicant herein. Aggrieved by the said conduct of the RP, the Applicant herein preferred the instant Application challenging the said adjudication of the claim of the Applicant by the RP.

The Applicant has also mentioned that the RP has gone into technicalities in order to reject the claim of the Applicant. Furthermore, none of the above reasons/conclusions (Points 2 and 3) stated above can be arrived at without expert knowledge, therefore, the same ought to be set aside as they are incorrect and illegal. It has been submitted that in terms of law settled by the Hon'ble Supreme Court in the matter of Swiss Ribbons Pvt. Ltd. & Anr. v Union Of India & Anr. bearing Writ Petition No. 99 of 2018, the Hon'ble Supreme Court has clearly stated that the RP does not have any adjudicatory powers and the observations/reasons on the basis of which the RP has rejected the claim of the Applicant is highly unjust, incorrect and illegal. Reliance was further placed on decision of the Hon’ble NCLAT in Mr. S. Rajendran, Resolution Professional of PRC International Hotels Private Limited vs. Jonathan Mouralidarene.

The Applicant has further drawn the attention of this Tribunal that the Applicant herein has annexed the sales ledger of the Corporate Debtor showing the amount as claimed by the Applicant, in light of the said document in addition with the transfer letter issued by the Director of the Corporate Debtor substantiating that they had transferred the money(s) from the Company to the Corporate Debtor. The RP was duty bound to collate the said claim in terms of the said letter and its duties as prescribed under Section 18(1)(b) of the Code. That the RP has neither followed up with the Director nor has it taken into consideration the Customer Sales Ledger issued by the Corporate Debtor itself substantiating the claim of the Applicant.

To buttress its arguments, the Applicant has placed further reliance on Jiten S Gada v Manoj Kumar Agarwal, RP of DS Kulkarni Developers Pvt. Ltd. & Ors. Bearing Company Appeal (AT)(Insol) No. 63 of 2024.

The Applicant filed Affidavit dated 10.04.2023 and submitted that the Respondent subsequently raised certain new and unfounded Objections by way of its email dated 11.03.2020, which were not mentioned in the earlier objections raised by it. In terms of the said communication, the Resolution Professional stated that the claim of the Applicant could not be accepted because a) There was no entry in the books of the Corporate Debtor for such transfer; b) Signature of the Director, Mr. Atul Gupta did not match; and c) Basic Rate could not be as low as stated in the Transfer Letter. The Applicant submitted that the issues raised in points b) and c) of the email dated 11.03.2020 stood clarified as the Applicant alongwith the Director of the Corporate Debtor, Mr. Atul Gupta had a meeting with the Resolution Professional and had clearly and mentioned in categorical terms that the said transfer letter was issued by him and that the facts stated on the same are true and correct.

The Applicant had even issued an email dated 01.03.2022 to the Resolution Professional reiterating the said events and had requested the Resolution Professional to bring the said facts on record before the Tribunal in order to adjudicate the claim of the Applicant in a fair manner. The Applicant did not receive any response to the said email, nor the Resolution Professional apprised this Tribunal of the said information.

The Respondent has submitted that the present application is neither maintainable nor the same is tenable in law. Admittedly, the Applicant has admitted in its application that the Applicant booked and invested in the project to be developed by "Earth Iconic Infrastructures Pvt Ltd" and further the amounts were disbursed by the Applicant to "Earth Iconic Infrastructures Pvt Ltd" and not to the Corporate Debtor. It is well settled law that disbursement is a sine-qua-non for a claimant to be considered as a Financial Creditor. Reference was made to the decision of the Hon'ble Supreme Court in Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited Versus Axis Bank Limited Etc, Civil Appeal No. 8512-8527 of 2019.

The essential ingredient i.e. "disbursement" against time value for money is missing as admitted by the Applicant that the disbursement has been made to a different legal entity and not the Corporate Debtor, the claim of the Applicant cannot be admitted under the CIRP of the Corporate Debtor.

It was submitted that the Respondent has to work within the boundaries of the Insolvency and Bankruptcy Code, 2016 and the regulations framed thereunder. It is a duty of the Answering Respondent to only verify/collate the claim as per the financials available to the Resolution Professional. That the Answering Respondent has verified the books of the Corporate Debtor and the documents submitted by the Applicant and the amount claimed is neither reflected in the financial statements of the Corporate Debtor nor the Applicant is able to verify the same from the records of the Corporate Debtor.

The settled principle of law laid down by the Hon'ble Supreme Court that a litigant who is coming to the court must come with clean hands however in the present application, the Applicant is guilty of "Suppressio vari" and "Suggestio falsi" as the Applicant has concealed facts in the present matter.

It was submitted that Adjudicating Authority vide its order dated 13.05.2019 was pleased to admit the Company Petition i.e. C.P. (IB) No. 1747(PB) of 2018, in the matter of Vijay Kumar Suri and Ors. V. Earth Buildprop Pvt Ltd for initiating Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "Code") and appointed the Answering Respondent as Interim Resolution Professional to carry the Corporate Insolvency Resolution Process in the matter of Earth Buildprop Private Limited.

It was submitted that as per the provisions of the Insolvency and Bankruptcy Code, 2016, it is the duty of the IRP/RP to collate all the claims filed before him and verify the same from the books of the Corporate Debtor. Moreover, if the claim filed by the Creditor is not showing and/or cannot be verified from the Books of Corporate Debtor, then in that scenario, it is the duty of the Interim Resolution Professional to ask for information from the Creditor in order to verify the claim and only on the satisfaction of the Interim Resolution Professional, claim of the Creditor can be verified and/or by the order of this Adjudicating Authority. The Interim Resolution Professional/Resolution Professional can only verify the claim filed before him.

Pursuant to the public announcement the Applicant on 25.05.2019 herein filed its claim against the Corporate Debtor under -FORM CA and further submitted some documents supporting the claim of the Applicant herein. However, it is pertinent to mention here that at the time of filing the claim, no Letter dated 18.02.2017 was provided by the Applicant and the same has been provided after 9 months of filing the claim. A bare perusal of the said letter shows that the same has not been signed by the Corporate Debtor but by another Legal Entity i.e. Earth Infrastructure Pvt Ltd.

The Respondent provisionally admitted the claim of the Applicant which was subject to verification as the same could not be verified in the absence of availability of audited financial statements and book of accounts. Further, it was clearly mentioned that the list of the creditors would be updated on the basis of clarification(s) received. Therefore, it is quite clear that the acceptance was subject to the verification of the claim from the financials of the Corporate Debtor and the claim had only been accepted provisionally and there was no final determination on the claim of the Applicant.

It was submitted that under the Code, the power given to the Resolution Professional is only administrative in nature and no power is given to the Resolution Professional to adjudicate any claim as the said power of adjudicating is vested only with this Adjudicating Authority and furthermore, the Resolution Professional is required to only verify the claim filed by the creditor. Reliance was placed on the decision of the Hon'ble Apex Court in Swiss Ribbons Pvt Ltd & Ors. v. Union Bank of India & Ors. AIR2019SC379:

On receipt of the claim and the supporting documents, the Answering Respondent as mandated under the Code took steps to verify the claim of the Applicant. However, on perusal of the books of account of the Corporate Debtor, the claim could not be verified, since the claim filed by the Applicant is not reflected in the Books of Account of the Corporate Debtor.

The Respondent time and again sought proof of transfer from project Earth Titanium Studio of Earth Iconic Infrastructure Pvt Ltd to project Elacassa of Earth Buildprop Pvt Ltd. However, it is only after a period of 9 months that the Applicant submitted one transfer letter to the Respondent thereby, showing the transfer of allotment, which is not issued by the Corporate Debtor.

The alleged transfer letter neither has been issued by Earth Iconic Infrastructures Pvt. Ltd. nor has been accepted by the Corporate Debtor. Thus, in absence of same, the IRP/RP cannot accept such document which finds no mention in the records of the Corporate Debtor. Ltd. nor has been accepted by the Corporate Debtor. Thus, the sanctity of the said letter could not be verified by the Answering Respondent as the same could not be found in the records of the Corporate Debtor and even the signature of the director does not match with the signature of Mr. Atul Gupta, who is shown to have signed the same.

Further, as per the alleged transfer letter dated 18.02.2017, the amount of Rs. 32,13,394/- was transferred to the account of the Corporate Debtor, however, the same was not being reflected in the books of the Corporate Debtor and accordingly, the Respondent filed its claim with the Resolution Professional of Earth Iconic Infrastructure Pvt. Ltd but the same has not been accepted by the Resolution Professional of Earth Iconic Infrastructure Pvt. Ltd. Thus, in absence of any amount being transferred to the account of Corporate Debtor and also in absence of any acknowledgment of claim by Resolution Professional of Earth Iconic Infrastructure Pvt. Ltd., the Answering Respondent is not in a position to verify the claim filed by the Applicant.

It was further submitted that apart from alleged transfer of Rs. 32,13,394/-, the Applicant has also claimed that he has paid an amount of Rs. 29,05,829/-in cash. It is submitted that the alleged discount notes do not justify payment through cash and no such corresponding cash entries / vouchers is available in the records of the Corporate Debtor.

It was also submitted that the claim of the Applicant was kept in Category B wherein, it was made clear that the claims in said category could not be verified from the books of account in the absence of availability of audited financial statements and book of accounts. Further, it was clearly mentioned that the list of the creditors would be updated on the basis of clarification(s) received. Therefore, it is quite clear that the acceptance was subject to the verification of the claim from the financials of the Corporate Debtor.

The IBC, 2016 and the Regulations framed thereunder do not permit the transfer of disbursement from one legal entity to another legal entity under the same corporate debtor, because the CIRP for two different legal entities is always separate.

Admittedly, there is no entry of transfer from Earth Iconic Infrastructures Pvt. Ltd. to Earth Buildprop Private Limited. All these are separate entities with separate CIRP's and separate resolution plans and there is no provision or transfer procedure for transferring a booking from one legal entity to another legal entity with Projects in different States of U.P., Haryana and Delhi.

There is separate claim valuation of different legal entities and there is no tripartite agreement in between Earth Infrastructures, Earth Iconic and Earth Buildprop from transferring a booking of a flat from one legal entity to another legal entity.

No order as to costs.